Employing People
Small businesses are experiencing a hard time. As well as worrying about the bottom line, you may be finding that you are faced with the difficult task of downsizing the business and having to make employees redundant. This is not an easy decision to come to and the last thing you’ll want to be worrying about is whether you are meeting your obligations as an employer and following the dismissals procedure correctly. Equally, it’s important to remember the staff that remain in the business – how can you keep them motivated in these challenging business conditions?
This guide contains the following sections
The Redundancy Process
Motivation
Staff Training
Use Appraisals to Manage Performance
Employee Share Schemes
Implement Staff Incentive Schemes
An unfortunate reality of the current economic conditions is that many businesses are faced with the prospect of having to make staff redundant. This can be necessary for a number of reasons brought on by the economic climate; it might be that your business is forced to relocate, or some employees may carry out work that is no longer necessary due to losing a customer or piece of business. If this is the case and there is no alternative but to reduce your workforce, there are a number of measures that you need to apply to ensure that you follow the fair dismissals procedure and also keep the affected employees informed. The advice below will help you manage the redundancy process.
Firstly, make sure you know your options. Lay-offs and short-time working may suit your business better than redundancies so do consider the alternatives to reducing your workforce permanently if you can. If you are in a position where it’s the only option, you need to start the process with redundancy selections. Whether you are making a group or just one employee redundant, a selection criteria needs to be established in order for you to make your decision. This criteria must be objective, non-discriminatory and applied consistently across all the affected staff members.
Once you have identified these employees you are able to start the dismissal procedure. In the case of individuals, you must write to each employee setting out the rationale for their redundancy and invite them to a meeting to discuss the proposed dismissal. For 20 or more redundancies, you must notify the Department for Business and consult workplace representatives. A collective redundancy consultation must also be carried out.
Be aware of the right of your employees to receive a statutory redundancy payment (SRP). If you fail to make an SRP, an employee can make a claim to an employment tribunal, and can also challenge the amount of pay you have offered. BIS provides a free online tool where you can calculate how much SRP an employee is entitled to, making it easier for you to get it exactly right.
You will need to prepare a written statement for the redundant employee which will highlight the amount of redundancy payment owed and how you worked it out. To find out more about the written statement, visit the legal section or go to: www.businesslink.gov.uk/employingpeople.
People who have worked for many years in the same job or workplace can find redundancy a traumatic experience. Where possible, you should try to find ways of helping employees coming to terms with their situation. The practical and financial help you offer will of course depend on the size of your business and the seniority of the employee being made redundant, but in any case it is good practice to do your best to help employees find a new job. For example you could offer advice on searching for suitable vacancies in the press and on the internet or contact other local employers who might have vacancies
It is especially important to have motivated staff and during these financially challenging times, but it can feel like just another daunting task to add to your ever-growing list. Small businesses need to invest in motivating their employees more than ever at the moment and it can help to ensure productivity and performance remain solid and valuable employees are retained during the downturn.
Training employees is extremely important. Not only will it increase morale amongst your employees but it will also help push your business forward.
Skills development can be used in a number of ways. You can provide training so that someone can carry out their existing tasks more efficiently or to a higher standard. Alternatively, you might seek training for an individual so that they can take on a different role in your business. This could be a position with increased responsibilities or perhaps an entirely new role that will allow your business to move into new areas of work.
Ensure that the training you provide responds clearly to your business needs. These should be clear from your business plan. Conduct a training needs analysis before embarking on any training – this, as well as consultations with your staff, should form the basis of your decision about which training is appropriate.
Use appraisals to manage performance
Ensure you carry out appraisals once or twice a year. Agreeing appropriate objectives can improve your business performance and help you assess just how well your employees are working. This will also help your employees have a particular focus and make them feel valued.
If you are thinking about introducing a share scheme – think about what will suit your business and decide on your objectives for setting this up. This could be to attract staff, offer an incentive to retain staff, provide targeted incentives to selected employees, to conserve cash and reduce the cost of pay and/or bonuses.
Choose the particular scheme that will help you achieve these objectives. Employees can be given shares that are held in a trust, receive share options or purchase shares on attractive terms. Consider how much you want to spend on the plan and think about the exact details.
Implement Staff Incentive Schemes
Introducing an effective system of incentives will help retain existing staff, increase morale, boost productivity and focus employees on achieving targets.
It is important that any incentive schemes you set up are affordable, transparent and appropriate to your business and the jobs they link to. They work best alongside good pay schemes and working conditions and are most successful when implemented with other good management practices, such as performance management, appraisals and appropriate communication and training programmes.
Finding ways to save money and keep your workforce content during the financial downturn can be difficult. Many businesses do not think that they can save time and money when complying with employment law and often seek external advice, which can be costly. The government offers a range of solutions which can help you manage your obligations and keep your workforce happy, making it easier for you to get on with the job in hand. For more information about all the guidance and tools mentioned in this article, as well as practical advice on other areas of employment, visit www.businesslink.gov.uk/employingpeople
Advice from the Department for Business, Innovation and Skills (BIS)